Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
13-1964841
(IRS
Employer Identification No.)
|
||
180
Marcus Blvd., Hauppauge, New York
(Address
of principal executive offices)
|
11788
(Zip
Code)
|
||
(631) 231-7750
(Registrant's
telephone number, including area code)
|
|||
Securities
registered pursuant to Section 12(b) of the Act:
|
|||
Title
of each class:
|
Name
of Each Exchange on which Registered
|
||
Class A
Common Stock $.01 par value
|
The
Nasdaq Stock Market LLC
|
Class
|
Outstanding
|
Class A
common stock $.01 par value
|
20,604,460
|
Class B
common stock $.01 par value
|
2,260,954
|
Table
of Contents
|
||
PART
I
|
||
Item
1
|
Business
|
4
|
Item
1A
|
Risk
Factors
|
9
|
Item
1B
|
Unresolved
Staff Comments
|
13
|
Item
2
|
Properties
|
13
|
Item
3
|
Legal
Proceedings
|
14
|
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
14
|
PART
II
|
||
Item
5
|
Market
for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
15
|
Item
6
|
Selected
Consolidated Financial Data
|
17
|
Item
7
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
Item
7A
|
Quantitative
and Qualitative Disclosures About Market Risk
|
33
|
Item
8
|
Consolidated
Financial Statements and Supplementary Data
|
34
|
Item
9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
34
|
Item
9A
|
Controls
and Procedures
|
34
|
Item
9B
|
Other
Information
|
37
|
PART
III
|
||
Item
10
|
Directors,
Executive Officers and Corporate Governance
|
37
|
Item
11
|
Executive
Compensation
|
37
|
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
37
|
Item
13
|
Certain
Relationships and Related Transactions, and Director
Independence
|
37
|
Item
14
|
Principal
Accounting Fees and Services
|
37
|
PART
IV
|
||
Item
15
|
Exhibits,
Financial Statement Schedules
|
37
|
SIGNATURES
|
80
|
·
|
mobile
multi-media video products, including in-dash, overhead, headrest and
portable mobile video systems,
|
·
|
autosound
products including radios, speakers, amplifiers and CD
changers,
|
·
|
satellite
radios including plug and play models and direct connect
models,
|
·
|
automotive
security and remote start systems,
|
·
|
automotive
power accessories,
|
·
|
rear
observation and collision avoidance
systems,
|
·
|
Liquid
Crystal Display (“LCD”) flat panel
televisions,
|
·
|
home
and portable stereos,
|
·
|
two-way
radios,
|
·
|
digital
multi-media products such as personal video recorders and MP3
products,
|
·
|
camcorders,
|
·
|
clock-radios,
|
·
|
digital
voice recorders,
|
·
|
home
speaker systems,
|
·
|
portable
DVD players, and
|
·
|
digital
picture frames.
|
·
|
High-Definition
Television (“HDTV”) Antennas,
|
·
|
Wireless
Fidelity (“WiFi”) Antennas,
|
·
|
High-Definition
Multimedia Interface (“HDMI”)
accessories,
|
·
|
home
electronic accessories such as
cabling,
|
·
|
other
connectivity products,
|
·
|
power
cords,
|
·
|
performance
enhancing electronics,
|
·
|
TV
universal remotes,
|
·
|
flat
panel TV mounting systems,
|
·
|
iPod
specialized products,
|
·
|
wireless
headphones,
|
·
|
rechargeable
battery backups (UPS) for camcorders, cordless phones and portable video
(DVD) batteries and accessories,
and
|
·
|
power
supply systems.
|
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Electronics
|
$ | 449,433 | $ | 437,018 | $ | 432,943 | ||||||
Accessories
|
153,666 | 154,337 | 23,747 | |||||||||
Total
net sales
|
$ | 603,099 | $ | 591,355 | $ | 456,690 |
·
|
power
retailers,
|
·
|
mass
merchants,
|
·
|
regional
chain stores,
|
·
|
specialty
and internet retailers,
|
·
|
independent
12 volt retailers,
|
·
|
distributors,
|
·
|
new
car dealers,
|
·
|
vehicle
equipment manufacturers (OEM), and
|
·
|
the
U.S. military
|
·
|
product
design and development,
|
·
|
engineering
and testing,
|
·
|
sales
training and customer packaging,
|
·
|
instore
display design,
|
·
|
installation
training and technical support,
|
·
|
product
repair services and warranty,
|
·
|
nationwide
installation network, and
|
·
|
warehousing.
|
·
|
identifying
consumer trends and potential
demand,
|
·
|
responding
to those trends through product design and feature integration, which
includes software design, electrical engineering, industrial design and
pre-production testing. In the case of OEM customers, the product
development cycle may also include product validation to customer quality
standards, and
|
·
|
evaluating
and testing new products in our own facilities to ensure compliance with
our design specifications and
standards.
|
·
|
the
overall performance of the economy and discretionary consumer
spending,
|
·
|
competition
within key markets,
|
·
|
customer
acceptance of newly developed products and services,
and
|
·
|
the
demand for other products and
services.
|
·
|
our
supplier relationships will continue as presently in
effect,
|
·
|
our
suppliers will not become
competitors,
|
·
|
our
suppliers will be able to obtain the components necessary to produce
high-quality, technologically-advanced products for
us,
|
·
|
we
will be able to obtain adequate alternatives to our supply sources should
they be interrupted,
|
·
|
if
obtained, alternatively sourced products of satisfactory quality would be
delivered on a timely basis, competitively priced, comparably featured or
acceptable to our customers, and
|
·
|
our
suppliers have sufficient financial resources to fulfill their
obligations.
|
·
|
export
and import restrictions, tax consequences and other trade
barriers,
|
·
|
currency
fluctuations,
|
·
|
greater
difficulty in accounts receivable
collections,
|
·
|
economic
and political instability,
|
·
|
foreign
exchange controls that prohibit payment in U.S. dollars,
and
|
·
|
increased
complexity and costs of managing and staffing international
operations.
|
·
|
difficulties
in the integration and assimilation of the operations, technologies,
products and personnel of an acquired
business;
|
·
|
diversion
of management’s attention from other business
concerns;
|
·
|
increased
expenses associated with the acquisition;
and
|
·
|
potential
loss of key employees or customers of any acquired
business.
|
·
|
market
conditions change,
|
·
|
our
business plans or assumptions
change,
|
·
|
we
make significant acquisitions, and
|
·
|
we
need to make significant increases in capital expenditures or working
capital.
|
·
|
operating
results being below market
expectations,
|
·
|
announcements
of technological innovations or new products by us or our
competitors,
|
·
|
loss
of a major customer or supplier,
|
·
|
changes
in, or our failure to meet, financial estimates by securities
analysts,
|
·
|
industry
developments,
|
·
|
economic
and other external factors,
|
·
|
general
downgrading of our industry sector by securities
analysts,
|
·
|
inventory
write-downs, and
|
·
|
ability
to integrate acquisitions.
|
·
|
changes
in U.S. federal, state and local
law,
|
·
|
our
ability to implement operating cost structures that align with revenue
growth,
|
·
|
trade
sanctions against or for foreign
countries,
|
·
|
successful
integration of business acquisitions and new brands in our distribution
network,
|
·
|
compliance
with the Sarbanes-Oxley Act, and
|
·
|
compliance
with complex financial accounting and tax
standards.
|
Year
ended February 28, 2009
|
High
|
Low
|
||||||
First
Quarter
|
$ | 11.16 | $ | 8.45 | ||||
Second
Quarter
|
11.00 | 7.57 | ||||||
Third
Quarter
|
10.45 | 3.36 | ||||||
Fourth
Quarter
|
6.56 | 2.80 | ||||||
Year
ended February 29, 2008
|
High
|
Low
|
||||||
First
Quarter
|
$ | 15.29 | $ | 12.67 | ||||
Second
Quarter
|
13.48 | 9.63 | ||||||
Third
Quarter
|
13.04 | 10.02 | ||||||
Fourth
Quarter
|
13.47 | 9.00 |
Three
|
||||||||||||||||||||||||
Year
|
Year
|
Year
|
Months
|
|||||||||||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
Years
ended
|
||||||||||||||||||||
February
28,
|
February
29,
|
February
28,
|
February
28,
|
November
30,
|
||||||||||||||||||||
2009
|
2008 (5)
|
2007 (4)
|
2006
|
2005 (3)
|
2004
|
|||||||||||||||||||
Consolidated
Statement of Operations Data
|
||||||||||||||||||||||||
Net
sales (1)
|
$ | 603,099 | $ | 591,355 | $ | 456,690 | $ | 103,050 | $ | 539,716 | $ | 563,653 | ||||||||||||
Operating
income (loss) (1)
|
(53,443 | ) | 4,422 | (5,077 | ) | (3,159 | ) | (27,690 | ) | (1,356 | ) | |||||||||||||
Net
income (loss) from continuing operations (1)
|
(71,029 | ) | 6,746 | 3,692 | 367 | (6,687 | ) | 64 | ||||||||||||||||
Net
income (loss) from discontinued operations (2)
|
- | 1,719 | (756 | ) | (184 | ) | (2,904 | ) | 77,136 | |||||||||||||||
Net
income (loss)
|
$ | (71,029 | ) | $ | 8,465 | $ | 2,936 | $ | 183 | $ | (9,591 | ) | $ | 77,200 | ||||||||||
Net
income (loss) per common share from continuing operations:
|
||||||||||||||||||||||||
Basic
|
$ | (3.11 | ) | $ | 0.29 | $ | 0.16 | $ | 0.02 | $ | (0.30 | ) | $ | 0.00 | ||||||||||
Diluted
|
$ | (3.11 | ) | $ | 0.29 | $ | 0.16 | $ | 0.02 | $ | (0.30 | ) | $ | 0.00 | ||||||||||
Net
income (loss) per common share:
|
||||||||||||||||||||||||
Basic
|
$ | (3.11 | ) | $ | 0.37 | $ | 0.13 | $ | 0.01 | $ | (0.43 | ) | $ | 3.52 | ||||||||||
Diluted
|
$ | (3.11 | ) | $ | 0.37 | $ | 0.13 | $ | 0.01 | $ | (0.43 | ) | $ | 3.45 | ||||||||||
As
of February 28,
|
As
of February 29,
|
As
of February 28,
|
As
of November 30,
|
|||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||||||
Consolidated
Balance Sheet Data
|
||||||||||||||||||||||||
Total
assets
|
$ | 461,296 | $ | 533,036 | $ | 499,120 | $ | 466,012 | $ | 485,864 | $ | 543,338 | ||||||||||||
Working
capital
|
241,080 | 275,787 | 305,960 | 340,564 | 340,488 | 362,018 | ||||||||||||||||||
Long-term
obligations
|
31,651 | 27,260 | 22,026 | 18,385 | 18,425 | 18,598 | ||||||||||||||||||
Stockholders'
equity
|
340,502 | 423,513 | 404,362 | 400,732 | 401,157 | 404,187 |
(1)
|
Amounts
exclude the financial results of discontinued operations (see Note 2 of
the Notes to Consolidated Financial
Statements).
|
(2)
|
2004
amount reflects the results of the divestiture of the Cellular business
and 2005 amount reflects the divestiture of
Malaysia.
|
(3)
|
2005
amounts reflect the acquisition of
Terk.
|
(4)
|
2007
amounts reflect the acquisition of Thomson Accessory
business.
|
(5)
|
2008
amounts reflect the acquisition of Oehlbach, Incaar, Technuity and Thomson
A/V (see Note 3 of the Notes to Consolidated
Financial Statements).
|
·
|
mobile
multi-media video products, including in-dash, overhead, headrest and
portable mobile video systems,
|
·
|
autosound
products including radios, speakers, amplifiers and CD
changers,
|
·
|
satellite
radios including plug and play models and direct connect
models,
|
·
|
automotive
security and remote start systems,
|
·
|
automotive
power accessories,
|
·
|
rear
observation and collision avoidance
systems,
|
·
|
Liquid
Crystal Display (“LCD”) flat panel
televisions,
|
·
|
home
and portable stereos,
|
·
|
two-way
radios,
|
·
|
digital
multi-media products such as personal video recorders and MP3
products,
|
·
|
camcorders,
|
·
|
clock-radios,
|
·
|
digital
voice recorders,
|
·
|
home
speaker systems,
|
·
|
portable
DVD players, and
|
·
|
digital
picture frames.
|
·
|
High-Definition
Television (“HDTV”) Antennas,
|
·
|
Wireless
Fidelity (“WiFi”) Antennas,
|
·
|
High-Definition
Multimedia Interface (“HDMI”)
accessories,
|
·
|
home
electronic accessories such as
cabling,
|
·
|
other
connectivity products,
|
·
|
power
cords,
|
·
|
performance
enhancing electronics,
|
·
|
TV
universal remotes,
|
·
|
flat
panel TV mounting systems,
|
·
|
iPod
specialized products,
|
·
|
wireless
headphones,
|
·
|
rechargeable
battery backups (UPS) for camcorders, cordless phones and portable video
(DVD) batteries and accessories,
and
|
·
|
power
supply systems.
|
·
|
acquisition
of Thomson’s Americas consumer electronics accessory
business,
|
·
|
acquisition
of Oehlbach’s accessory business,
|
·
|
acquisition
of Incaar’s OEM business,
|
·
|
acquisition
of Technuity’s accessory business,
|
·
|
acquisition
of Thomson’s audio/video business,
|
·
|
acquisition
of Terk Technologies,
|
·
|
acquisition
of Recoton and growth in Jensen
sales,
|
·
|
acquisition
of Code-Alarm branded products,
|
·
|
the
introduction of new products and lines such as portable DVD players,
satellite radio, digital antennas and mobile multi-media
devices,
|
·
|
volatility
in core mobile, consumer and accessories sales due to increased
competition, lower selling prices and decline in the national and global
economy.
|
·
|
Capitalize
and increase the Audiovox® family of
brands,
|
·
|
Capitalize
on niche product and distribution opportunities in the electronics
industry,
|
·
|
Leverage
our distribution network,
|
·
|
Grow
our international presence,
|
·
|
Pursue
strategic and complementary
acquisitions,
|
·
|
Continue
to outsource manufacturing to increase operating leverage,
and
|
·
|
Monitor
operating expenses.
|
Fiscal
|
Fiscal
|
|||||||||||||||
2009
|
2008
|
$
Change
|
%
Change
|
|||||||||||||
Electronics
|
$ | 449,433 | $ | 437,018 | $ | 12,415 | 2.8 | % | ||||||||
Accessories
|
153,666 | 154,337 | (671 | ) | (0.4 | ) | ||||||||||
Total
net sales
|
$ | 603,099 | $ | 591,355 | $ | 11,744 | 2.0 | % |
Fiscal
|
Fiscal
|
|||||||
2009
|
2008
|
|||||||
Gross
profit
|
$ | 100,268 | $ | 111,328 | ||||
Gross
margin percentage
|
16.6 | % | 18.8 | % |
Fiscal
|
Fiscal
|
|||||||||||||||
2009
|
2008
|
$
Change
|
%
Change
|
|||||||||||||
Operating
Expenses:
|
||||||||||||||||
Selling
|
$ | 33,505 | $ | 35,703 | $ | (2,198 | ) | (6.2 | ) % | |||||||
General
and administrative
|
70,870 | 61,220 | 9,650 | 15.8 | ||||||||||||
Goodwill
and intangible asset impairment
|
38,814 | - | 38,814 |
100
|
||||||||||||
Engineering
and technical support
|
10,522 | 9,983 | 539 | 5.4 | ||||||||||||
Total
Operating Expenses
|
$ | 153,711 | $ | 106,906 | $ | 46,805 | 43.8 | % | ||||||||
Operating
income (loss)
|
$ | (53,443 | ) | $ | 4,422 | $ | (57,865 | ) | (1,308.6 | ) % |
·
|
An
increase in professional fees of approximately $4,600 as a result of legal
settlements, patent and royalty suits, increased audit fees and
the anticipated cost of a credit card breach (net of insurance) resulting
from an intrusion affecting credit card information maintained by the
Company.
|
·
|
Bad
debt increased approximately $1,600 as a result of general economic
conditions and the bankruptcy of an automotive
customer.
|
·
|
Depreciation
and amortization increased $1,500 as a result of our recent acquisitions
and new IT systems which have come online this fiscal
year.
|
·
|
Salary
expense increased approximately $4,100 as a result of our recent
acquisitions, severance payments due to our salary and overhead reduction
program and a benefit in the prior year for an employee call
option.
|
Fiscal
|
Fiscal
|
|||||||||||||||
2009
|
2008
|
$
Change
|
%
Change
|
|||||||||||||
Interest
and bank charges
|
$ | (1,817 | ) | $ | (2,127 | ) | $ | 310 | 14.6 | % | ||||||
Equity
in income of equity investee
|
975 | 3,590 | (2,615 | ) | (72.8 | ) | ||||||||||
Other,
net
|
(1,669 | ) | 4,709 | (6,378 | ) | (135.4 | ) | |||||||||
Total
other income
|
$ | (2,511 | ) | $ | 6,172 | $ | (8,683 | ) | (140.7 | ) % |
Fiscal
|
Fiscal
|
|||||||
2009
|
2008
|
|||||||
Net
sales from discontinued operations
|
$ | - | $ | - | ||||
Income
(loss) from discontinued operations before income taxes
|
3,248 | |||||||
Income
tax (provision) benefit
|
- | (1,529 | ) | |||||
Net
income (loss) from discontinued operations
|
- | 1,719 | ||||||
Loss
on sale of discontinued operations, net of tax
|
- | - | ||||||
Loss
from discontinued operations, net of tax
|
$ | - | $ | 1,719 |
Fiscal
|
Fiscal
|
|||||||
2009
|
2008
|
|||||||
Operating
(loss) income
|
$ | (53,443 | ) | $ | 4,422 | |||
Other
income, net
|
(2,511 | ) | 6,172 | |||||
(Loss)
income from continuing operations before income taxes
|
(55,954 | ) | 10,594 | |||||
Income
tax benefit (expense)
|
(15,075 | ) | (3,848 | ) | ||||
Net
(loss) income from continuing operations
|
(71,029 | ) | 6,746 | |||||
Net
income (loss) from discontinued operations, net of tax
|
- | 1,719 | ||||||
Net
(loss) income
|
$ | (71,029 | ) | $ | 8,465 | |||
Net
(loss) income per common share:
|
||||||||
Basic
|
$ | (3.11 | ) | $ | 0.37 | |||
Diluted
|
$ | (3.11 | ) | $ | 0.37 |
Fiscal
|
||||
2009
|
||||
GAAP
net loss
|
$ | (71,000 | ) | |
Adjustments:
|
||||
Goodwill
and intangible asset impairment
|
38,800 | |||
Tax
impairment
|
15,100 | |||
Non-standard
professional fees related to intellectual property and trademarks and
credit card intrusion
|
2,300 | |||
Expenses
related to customer and vendor bankruptcies
|
6,400 | |||
Expenses
related to severance and overhead reduction program
|
1,000 | |||
Discontinuance
of portable navigation line
|
2,900 | |||
Pro
forma net loss
|
$ | (4,500 | ) | |
GAAP
net loss per common share, diluted
|
$ | (3.11 | ) | |
Pro
forma net loss per common share, diluted
|
$ | (0.20 | ) | |
Diluted
weighted average number of shares (GAAP and pro forma)
|
22,860,402 |
Fiscal
|
Fiscal
|
|||||||||||||||
2008
|
2007
|
$
Change
|
%
Change
|
|||||||||||||
Electronics
|
$ | 437,018 | $ | 432,943 | $ | 4,075 | 0.9 | % | ||||||||
Accessories
|
154,337 | 23,747 | 130,590 | 549.9 | ||||||||||||
Total
net sales
|
$ | 591,355 | $ | 456,690 | $ | 134,665 | 29.5 | % |
Fiscal
|
Fiscal
|
|||||||
2008
|
2007
|
|||||||
Gross
profit
|
$ | 111,328 | $ | 79,319 | ||||
Gross
margin percentage
|
18.8 | % | 17.4 | % |
Fiscal
|
Fiscal
|
|||||||||||||||
2008
|
2007
|
$
Change
|
%
Change
|
|||||||||||||
Operating
Expenses:
|
||||||||||||||||
Selling
|
$ | 35,703 | $ | 28,220 | $ | 7,483 | 26.5 | % | ||||||||
General
and administrative
|
61,220 | 48,920 | 12,300 | 25.1 | ||||||||||||
Engineering
and technical support
|
9,983 | 7,256 | 2,727 | 37.6 | ||||||||||||
Total
Operating Expenses
|
$ | 106,906 | $ | 84,396 | $ | 22,510 | 26.7 | % | ||||||||
Operating
income (loss)
|
$ | 4,422 | $ | (5,077 | ) | $ | 9,499 | 187.1 | % |
Fiscal
|
Fiscal
|
|||||||||||||||
2008
|
2007
|
$
Change
|
%
Change
|
|||||||||||||
Core
operating expenses
|
$ | 81,809 | $ | 83,216 | $ | (1,407 | ) | (1.69 | ) % | |||||||
Operating
expenses from acquired businesses
|
25,097 | 1,180 | 23,917 | 2,026.86 | ||||||||||||
Total
operating expenses
|
$ | 106,906 | $ | 84,396 | $ | 22,510 | 26.67 | % |
·
|
$12,149
of expenses in Fiscal 2008 for the recently acquired operations of Thomson
Accessory, Oehlbach, Incaar, Technuity and Thomson Audio/Video
operations,
|
·
|
$1,392
increase in salaries and related payroll taxes and benefits due to an
increase in executive bonuses and profit sharing as a result of the
company meeting certain earnings targets and general fiscal wage
increases,
|
·
|
$454
increase in a non-cash stock based compensation and warrant expense due to
the vesting of options to
employees
|
·
|
and
outside consultants,
|
·
|
$559
increase in depreciation and amortization due to an increase in capital
expenditures and amortizable intangibles as a result of acquisitions and
investments in new systems,
|
·
|
$501
increase in communication expenses,
|
·
|
$344
increase in software maintenance fees,
and
|
·
|
$602
increase in legal settlements from claims by a
licensor.
|
Fiscal
|
Fiscal
|
|||||||||||||||
2008
|
2007
|
$
Change
|
%
Change
|
|||||||||||||
Interest
and bank charges
|
$ | (2,127 | ) | $ | (1,955 | ) | $ | (172 | ) | 8.8 | % | |||||
Equity
in income of equity investees
|
3,590 | 2,937 | 653 | 22.2 | ||||||||||||
Other,
net
|
4,709 | 6,253 | (1,544 | ) | (24.7 | ) | ||||||||||
Total
other income
|
$ | 6,172 | $ | 7,235 | $ | (1,063 | ) | (14.7 | ) % |
Fiscal
|
Fiscal
|
|||||||
2008
|
2007
|
|||||||
Net
sales from discontinued operations
|
$ | - | $ | - | ||||
Income
(loss) from discontinued operations before income taxes
|
3,248 | (1,163 | ) | |||||
Income
tax (provision) benefit
|
(1,529 | ) | 407 | |||||
Net
income (loss) from discontinued operations
|
$ | 1,719 | $ | (756 | ) |
Fiscal
|
Fiscal
|
|||||||
2008
|
2007
|
|||||||
Operating
income (loss)
|
$ | 4,422 | $ | (5,077 | ) | |||
Other
income, net
|
6,172 | 7,235 | ||||||
Income
from continuing operations before income taxes
|
10,594 | 2,158 | ||||||
Income
tax (expense) benefit
|
(3,848 | ) | 1,534 | |||||
Net
income from continuing operations
|
6,746 | 3,692 | ||||||
Net
income (loss) from discontinuing operations, net of tax
|
1,719 | (756 | ) | |||||
Net
income
|
$ | 8,465 | $ | 2,936 | ||||
Net
income per common share:
|
||||||||
Basic
|
$ | 0.37 | $ | 0.13 | ||||
Diluted
|
$ | 0.37 | $ | 0.13 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Cash
provided by (used in):
|
||||||||||||
Operating
activities
|
$ | 30,006 | $ | (64,691 | ) | $ | 43,420 | |||||
Investing
activities
|
(3,991 | ) | 93,465 | (40,897 | ) | |||||||
Financing
activities
|
4,655 | (5,241 | ) | (3,449 | ) | |||||||
Effect
of exchange rate changes on cash
|
(507 | ) | 335 | 119 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
$ | 30,163 | $ | 23,868 | $ | (807 | ) |
Payments
Due by Period
|
||||||||||||||||||||
Less
than
|
1-3
|
4-5 |
After
|
|||||||||||||||||
Contractual
Cash Obligations
|
Total
|
1
Year
|
Years
|
Years
|
5
Years
|
|||||||||||||||
Capital
lease obligation (1)
|
$ | 10,927 | $ | 521 | $ | 1,056 | $ | 1,147 | $ | 8,203 | ||||||||||
Operating
leases (2)
|
32,433 | 4,757 | 6,948 | 4,901 | 15,827 | |||||||||||||||
Total
contractual cash obligations
|
$ | 43,360 | $ | 5,278 | $ | 8,004 | $ | 6,048 | $ | 24,030 | ||||||||||
Amount
of Commitment Expiration per period
|
||||||||||||||||||||
Total
|
||||||||||||||||||||
Amounts
|
Less
than
|
1-3 | 4-5 |
After
|
||||||||||||||||
Other
Commercial Commitments
|
Committed
|
1
Year
|
Years
|
Years
|
5
years
|
|||||||||||||||
Bank
obligations (3)
|
$ | 1,467 | $ | 1,467 | $ | - | $ | - | $ | - | ||||||||||
Stand-by
letters of credit (4)
|
2,380 | 2,380 | - | - | - | |||||||||||||||
Commercial
letters of credit (4)
|
- | - | - | - | - | |||||||||||||||
Debt
(5)
|
7,160 | 1,264 | 4,000 | 1,896 | - | |||||||||||||||
Contingent
earn-out payments (6)
|
4,531 | 890 | 3,212 | 429 | - | |||||||||||||||
Unconditional
purchase obligations (7)
|
62,845 | 62,845 | - | - | - | |||||||||||||||
Total
commercial commitments
|
$ | 78,383 | $ | 68,846 | $ | 7,212 | $ | 2,325 | $ | - |
1.
|
Represents
total payments (interest and principal) due under a capital lease
obligation which has a current (included in other current liabilities) and
long term principal balance of $76 and $5,531, respectively at February
28, 2009.
|
2.
|
We
enter into operating leases in the normal course of
business.
|
3.
|
Represents
amounts outstanding under the Audiovox Germany factoring agreement at
February 28, 2009.
|
4.
|
Commercial
letters of credit are issued during the ordinary course of business
through major domestic banks as requested by certain
suppliers. We also issue standby letters of credit to secure
certain bank obligations and insurance
requirements.
|
5.
|
Represents
amounts outstanding under term loan agreements in connection with the
Oehlbach acquisition. This amount also includes amounts due
under a call-put option with certain employees of Audiovox
Germany.
|
6.
|
Represents
contingent payments in connection with the Thomson Accessory and Oehlbach
acquisitions (see Note 3 of the Consolidated Financial
Statements).
|
7.
|
Open
purchase obligations represent inventory commitments. These
obligations are not recorded in the consolidated financial statements
until commitments are fulfilled and such obligations are subject to change
based on negotiations with
manufacturers.
|
·
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
Company;
|
·
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and
directors of the Company; and
|
·
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial
statements.
|
Financial
Statements:
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
39
|
Consolidated
Balance Sheets as of February 28, 2009 and February 29,
2008
|
40
|
Consolidated
Statements of Operations for the years ended February 28, 2009, February
29, 2008 and February 28, 2007
|
41
|
Consolidated
Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the
years ended February 28, 2009, February 29, 2008 and February
28, 2007
|
42
|
Consolidated
Statements of Cash Flows for the years ended February 28, 2009, February
29, 2008 and February 28, 2007
|
44
|
Notes
to Consolidated Financial Statements
|
45
|
Financial
Statement Schedule:
|
|
Schedule
II - Valuation and Qualifying Accounts
|
77
|
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 69,504 | $ | 39,341 | ||||
Accounts
receivable, net
|
104,896 | 112,688 | ||||||
Inventory
|
125,301 | 155,748 | ||||||
Receivables
from vendors
|
12,195 | 29,358 | ||||||
Prepaid
expenses and other current assets
|
17,973 | 13,780 | ||||||
Deferred
income taxes
|
354 | 7,135 | ||||||
Total
current assets
|
330,223 | 358,050 | ||||||
Investment
securities
|
7,744 | 15,033 | ||||||
Equity
investments
|
13,118 | 13,222 | ||||||
Property,
plant and equipment, net
|
19,903 | 21,550 | ||||||
Goodwill
|
- | 23,427 | ||||||
Intangible
assets
|
88,524 | 101,008 | ||||||
Deferred
income taxes
|
221 | - | ||||||
Other
assets
|
1,563 | 746 | ||||||
Total
assets
|
$ | 461,296 | $ | 533,036 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 41,796 | $ | 24,433 | ||||
Accrued
expenses and other current liabilities
|
32,575 | 38,575 | ||||||
Income
taxes payable
|
2,665 | 5,335 | ||||||
Accrued
sales incentives
|
7,917 | 10,768 | ||||||
Deferred
income taxes
|
1,459 | - | ||||||
Bank
obligations
|
1,467 | 3,070 | ||||||
Current
portion of long-term debt
|
1,264 | 82 | ||||||
Total
current liabilities
|
89,143 | 82,263 | ||||||
Long-term
debt
|
5,896 | 1,621 | ||||||
Capital
lease obligation
|
5,531 | 5,607 | ||||||
Deferred
compensation
|
2,559 | 4,406 | ||||||
Other
tax liabilities
|
2,572 | 4,566 | ||||||
Deferred
tax liabilities
|
4,657 | 6,057 | ||||||
Other
long term liabilities (see Note 3)
|
10,436 | 5,003 | ||||||
Total
liabilities
|
120,794 | 109,523 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders'
equity:
|
||||||||
Series
preferred stock, $.01 par value; 1,500,000 shares authorized, no shares
issued or outstanding
|
- | - | ||||||
Common
stock:
|
||||||||
Class
A, $.01 par value; 60,000,000 shares authorized, 22,424,212 and 22,414,212
shares issued, 20,604,460 and 20,593,660 shares
outstanding at February 28, 2009 and February 29 2008,
respectively
|
224 | 224 | ||||||
Class
B convertible, $.01 par value; 10,000,000 shares authorized, 2,260,954
shares issued and outstanding
|
22 | 22 | ||||||
Paid-in
capital
|
274,464 | 274,282 | ||||||
Retained
earnings
|
91,513 | 162,542 | ||||||
Accumulated
other comprehensive (loss) income
|
(7,325 | ) | 4,847 | |||||
Treasury
stock, at cost, 1,819,752 and 1,820,552 shares of Class A common stock at
February 28, 2009 and February 29, 2008, respectively
|
(18,396 | ) | (18,404 | ) | ||||
Total
stockholders' equity
|
340,502 | 423,513 | ||||||
Total
liabilities and stockholders' equity
|
$ | 461,296 | $ | 533,036 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Net
sales
|
$ | 603,099 | $ | 591,355 | $ | 456,690 | ||||||
Cost
of sales
|
502,831 | 480,027 | 377,371 | |||||||||
Gross
profit
|
100,268 | 111,328 | 79,319 | |||||||||
Operating
expenses:
|
||||||||||||
Selling
|
33,505 | 35,703 | 28,220 | |||||||||
General
and administrative
|
70,870 | 61,220 | 48,920 | |||||||||
Goodwill
and intangible asset impairment
|
38,814 | - | - | |||||||||
Engineering
and technical support
|
10,522 | 9,983 | 7,256 | |||||||||
Total
operating expenses
|
153,711 | 106,906 | 84,396 | |||||||||
Operating
(loss) income
|
(53,443 | ) | 4,422 | (5,077 | ) | |||||||
Other
income (expense):
|
||||||||||||
Interest
and bank charges
|
(1,817 | ) | (2,127 | ) | (1,955 | ) | ||||||
Equity
in income of equity investee
|
975 | 3,590 | 2,937 | |||||||||
Other,
net
|
(1,669 | ) | 4,709 | 6,253 | ||||||||
Total
other income (expenses), net
|
(2,511 | ) | 6,172 | 7,235 | ||||||||
(Loss)
income from continuing operations before income taxes
|
(55,954 | ) | 10,594 | 2,158 | ||||||||
Income
tax benefit (expense)
|
(15,075 | ) | (3,848 | ) | 1,534 | |||||||
Net (loss)
income from continuing operations
|
(71,029 | ) | 6,746 | 3,692 | ||||||||
Net
(loss) income from discontinued operations, net of tax (see Note
2)
|
- | 1,719 | (756 | ) | ||||||||
Net
(loss) income
|
$ | (71,029 | ) | $ | 8,465 | $ | 2,936 | |||||
Net
income (loss) per common share (basic):
|
||||||||||||
From
continuing operations
|
$ | (3.11 | ) | $ | 0.29 | $ | 0.16 | |||||
From
discontinued operations
|
- | 0.08 | (0.03 | ) | ||||||||
Net
income (loss) per common share (basic)
|
$ | (3.11 | ) | $ | 0.37 | $ | 0.13 | |||||
Net
income (loss) per common share (diluted):
|
||||||||||||
From
continuing operations
|
$ | (3.11 | ) | $ | 0.29 | $ | 0.16 | |||||
From
discontinued operations
|
- | 0.08 | (0.03 | ) | ||||||||
Net
income (loss) per common share (diluted)
|
$ | (3.11 | ) | $ | 0.37 | $ | 0.13 | |||||
Weighted-average
common shares outstanding (basic)
|
22,860,402 | 22,853,482 | 22,366,413 | |||||||||
Weighted-average
common shares outstanding (diluted)
|
22,860,402 | 22,876,162 | 22,557,272 |
Class
A
|
Accumulated
|
Total
|
||||||||||||||||||||||||||
and
Class B
|
other
|
Stock-
|
||||||||||||||||||||||||||
Preferred
|
Common
|
Paid-in
|
Retained
|
comprehensive
|
Treasury
|
holders'
|
||||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Earnings
|
income
(loss)
|
stock
|
equity
|
||||||||||||||||||||||
Balances
at February 28, 2006
|
2,500 | $ | 237 | $ | 263,008 | $ | 148,427 | $ | (608 | ) | $ | (12,832 | ) | $ | 400,732 | |||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | 2,936 | - | - | 2,936 | |||||||||||||||||||||
Foreign
currency translation adjustment, net of reclassification adjustment (see
disclosure below)
|
- | - | - | - | 1,180 | - | 1,180 | |||||||||||||||||||||
Unrealized
loss on marketable securities, net of tax effect of $1,210, and
reclassification adjustment (see disclosure below)
|
- | - | - | - | (1,892 | ) | - | (1,892 | ) | |||||||||||||||||||
Other
comprehensive loss
|
- | - | - | - | - | - | (712 | ) | ||||||||||||||||||||
Comprehensive
income
|
- | - | - | - | - | - | 2,224 | |||||||||||||||||||||
Exercise
of stock options into 485,000 shares of common stock
|
- | 5 | 4,223 | - | - | - | 4,228 | |||||||||||||||||||||
Purchase
of 305,100 shares of treasury stock
|
- | - | - | - | - | (4,155 | ) | (4,155 | ) | |||||||||||||||||||
Tax
benefit of stock options exercised
|
- | - | 896 | - | - | - | 896 | |||||||||||||||||||||
Stock
based compensation expense
|
- | - | 432 | - | - | - | 432 | |||||||||||||||||||||
Repurchase
of preferred stock
|
(2,500 | ) | - | 2,495 | - | - | - | (5 | ) | |||||||||||||||||||
Issuance
of 605 shares of treasury stock
|
- | 2 | - | - | 8 | 10 | ||||||||||||||||||||||
Balances
at February 28, 2007
|
- | $ | 242 | $ | 271,056 | $ | 151,363 | $ | (1,320 | ) | $ | (16,979 | ) | $ | 404,362 | |||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | 8,465 | - | - | 8,465 | |||||||||||||||||||||
Foreign
currency translation adjustment, net of reclassification adjustment (see
disclosure below)
|
- | - | - | - | 4,229 | - | 4,229 | |||||||||||||||||||||
Unrealized
gain on marketable securities, net of tax effect of $1,239
|
- | - | - | - | 1,938 | - | 1,938 | |||||||||||||||||||||
Other
comprehensive income
|
- | - | - | - | - | - | 6,167 | |||||||||||||||||||||
Comprehensive
income
|
- | - | - | - | - | - | 14,632 | |||||||||||||||||||||
Exercise
of stock options into 131,464 shares of common stock
|
- | 4 | 3,144 | - | - | - | 3,148 | |||||||||||||||||||||
Reversal
of tax benefit from stock options exercised
|
- | - | (805 | ) | - | - | - | (805 | ) | |||||||||||||||||||
Stock-based
compensation expense
|
- | - | 886 | - | - | - | 886 | |||||||||||||||||||||
Cumulative
effect of a change in accounting principles (FIN No. 48)
|
- | - | - | 2,714 | - | - | 2,714 | |||||||||||||||||||||
Purchase
of 128,100 shares of treasury stock
|
- | - | - | - | - | (1,431 | ) | (1,431 | ) | |||||||||||||||||||
Issuance
of 585 shares of treasury stock
|
- | - | 1 | - | - | 6 | 7 | |||||||||||||||||||||
Balances
at February 29, 2008
|
- | $ | 246 | $ | 274,282 | $ | 162,542 | $ | 4,847 | $ | (18,404 | ) | $ | 423,513 |
Class
A
|
Accumulated
|
Total
|
||||||||||||||||||||||||||
and
Class B
|
other
|
Stock-
|
||||||||||||||||||||||||||
Preferred
|
Common
|
Paid-in
|
Retained
|
comprehensive
|
Treasury
|
holders'
|
||||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Earnings
|
income
(loss)
|
stock
|
equity
|
||||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | (71,029 | ) | - | - | (71,029 | ) | |||||||||||||||||||
Foreign
currency translation adjustment
|
- | - | - | - | (7,486 | ) | - | (7,486 | ) | |||||||||||||||||||
Unrealized
gain on marketable securities, net of tax effect of
$(2,301)
|
- | - | - | - | (4,686 | ) | - | (4,686 | ) | |||||||||||||||||||
Other
comprehensive income
|
- | - | - | - | - | - | (12,172 | ) | ||||||||||||||||||||
Comprehensive
income
|
- | - | - | - | - | - | ||||||||||||||||||||||
Exercise
of stock options into 20,000 shares of common stock
|
- | - | 47 | - | - | - | 47 | |||||||||||||||||||||
Tax
benefit of stock options exercised
|
- | - | 20 | - | - | - | 20 | |||||||||||||||||||||
Reversal
of tax benefit from stock options expired
|
- | - | (190 | ) | - | - | - | (190 | ) | |||||||||||||||||||
Stock-based
compensation expense
|
- | - | 309 | - | - | - | 309 | |||||||||||||||||||||
Issuance
of 800 shares of treasury stock
|
- | - | (4 | ) | - | - | 8 | 4 | ||||||||||||||||||||
Balances
at February 28, 2009
|
- | $ | 246 | $ | 274,464 | $ | 91,513 | $ | (7,325 | ) | $ | (18,396 | ) | $ | 340,502 |
Year
ended
|
Year
ended
|
|||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Disclosure
of reclassification amount:
|
||||||||
Unrealized
foreign currency translation gain (loss)
|
$ | (7,486 | ) | $ | 3,886 | |||
Less:
reclassification adjustments for loss included in net income
(loss)
|
- | (343 | ) | |||||
Net
unrealized foreign currency translation gain (loss)
|
$ | (7,486 | ) | $ | 4,229 |
Year
ended
|
Year
ended
|
|||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Disclosure
of reclassification amount:
|
||||||||
Unrealized
gain (loss) on marketable securities
|
$ | (4,686 | ) | $ | 3,814 | |||
Less:
reclassification adjustments for gain (loss) included in net
income
|
- | 1,876 | ||||||
Net
unrealized gain (loss) on marketable securities, net of
tax
|
$ | (4,686 | ) | $ | 1,938 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss)
|
$ | (71,029 | ) | $ | 8,465 | $ | 2,936 | |||||
Net (income)
loss from discontinued operations
|
- | (1,719 | ) | 756 | ||||||||
Net
income (loss) from continuing operations
|
(71,029 | ) | 6,746 | 3,692 | ||||||||
Adjustments
to reconcile net income (loss) to net cash provided by (used in)
continuing operating activities:
|
||||||||||||
Depreciation
and amortization
|
7,294 | 5,750 | 3,994 | |||||||||
Bad
debt expense (recovery)
|
1,937 | 297 | (23 | ) | ||||||||
Goodwill
and intangible asset impairment
|
38,709 | - | - | |||||||||
Equity
in income of equity investee
|
(975 | ) | (3,590 | ) | (2,937 | ) | ||||||
Deferred
income tax expense (benefit), net
|
13,646 | (1,198 | ) | 606 | ||||||||
Loss
on disposal of property, plant and equipment
|
4 | 19 | 7 | |||||||||
Tax
(benefit) expense on stock options exercised
|
(20 | ) | 805 | (896 | ) | |||||||
Non-cash
compensation adjustment
|
651 | (790 | ) | 353 | ||||||||
Non-cash
stock based compensation expense
|
309 | 886 | 432 | |||||||||
Realized
(gain) loss on sale of investment
|
- | (1,533 | ) | 178 | ||||||||
Changes
in operating assets and liabilities (net of assets and liabilities
acquired):
|
||||||||||||
Accounts
receivable
|
768 | (17,925 | ) | 4,066 | ||||||||
Inventory
|
21,951 | (19,210 | ) | 23,589 | ||||||||
Receivables
from vendors
|
16,838 | (15,275 | ) | (4,079 | ) | |||||||
Prepaid
expenses and other
|
(9,214 | ) | (3,560 | ) | (1,147 | ) | ||||||
Investment
securities-trading
|
1,863 | 3,167 | (1,026 | ) | ||||||||
Accounts
payable, accrued expenses, accrued sales incentives and other current
liabilities
|
11,748 | (23,387 | ) | 7,466 | ||||||||
Income
taxes payable
|
(4,474 | ) | 4,107 | 9,145 | ||||||||
Net
cash provided by (used in) operating activities
|
30,006 | (64,691 | ) | 43,420 | ||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchases
of property, plant and equipment
|
(4,606 | ) | (7,326 | ) | (2,711 | ) | ||||||
Proceeds
from sale of property, plant and equipment
|
112 | 94 | 50 | |||||||||
Proceeds
from distribution from an equity investee
|
1,080 | 1,720 | 3,419 | |||||||||
Proceeds
from a liquidating distribution from an available-for-sale
investment
|
- | 646 | - | |||||||||
Purchase
of long-term investment
|
- | - | (1,000 | ) | ||||||||
Purchase
of short-term investments
|
- | (33,750 | ) | (158,230 | ) | |||||||
Sale
of short-term investments
|
- | 169,855 | 178,175 | |||||||||
Sale
of long-term investment
|
- | 4,561 | 360 | |||||||||
Purchase
of long-term investment
|
(548 | ) | - | - | ||||||||
Purchase
of patents
|
(650 | ) | (70 | ) | (475 | ) | ||||||
Purchase
of acquired businesses, less cash acquired
|
621 | (42,265 | ) | (60,485 | ) | |||||||
Net
cash provided by (used in) investing activities
|
(3,991 | ) | 93,465 | (40,897 | ) | |||||||
Cash
flows from financing activities:
|
||||||||||||
Borrowings
from bank obligations
|
4,654 | - | - | |||||||||
Repayments
on bank obligations
|
- | (1,758 | ) | (2,853 | ) | |||||||
Principal
payments on capital lease obligation
|
(73 | ) | (69 | ) | (89 | ) | ||||||
Proceeds
from exercise of stock options and warrants
|
46 | 3,148 | 4,228 | |||||||||
Repurchase
of Class A common stock
|
- | (1,425 | ) | (4,155 | ) | |||||||
Repurchase
of preferred stock
|
- | - | (5 | ) | ||||||||
Reissue
of treasury stock
|
8 | - | - | |||||||||
Principal
payments on debt
|
- | (4,332 | ) | (1,471 | ) | |||||||
Tax
expense (benefit) on stock options exercised
|
20 | (805 | ) | 896 | ||||||||
Net
cash provided by (used in) financing activities
|
4,655 | (5,241 | ) | (3,449 | ) | |||||||
Effect
of exchange rate changes on cash
|
(507 | ) | 335 | 119 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
30,163 | 23,868 | (807 | ) | ||||||||
Cash
and cash equivalents at beginning of year
|
39,341 | 15,473 | 16,280 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 69,504 | $ | 39,341 | $ | 15,473 | ||||||
Supplemental
Cash Flow Information:
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest,
excluding bank charges
|
$ | 1,224 | $ | 1,795 | $ | 1,739 | ||||||
Income
taxes (net of refunds)
|
$ | 3,816 | $ | 2,316 | $ | (10,226 | ) |
February
28, 2009
|
||||||||||||
Unrealized
|
Aggregate
|
|||||||||||
Holding
|
Fair
|
|||||||||||
Cost
|
Gain/(Loss)
|
Value
|
||||||||||
Long-term
Investment Securities*
|
$ | 4,550 | $ | (1,135 | ) | $ | 3,415 | |||||
CellStar
Common Stock*
|
- | 63 | 63 | |||||||||
Bliss-tel
Stock and Warrants* (see Note 13)
|
3,825 | (3,575 | ) | 250 | ||||||||
Other
Investment
|
1,474 | - | 1,474 | |||||||||
Deferred
Compensation Plan Assets - Trading Securities (see Note
10)
|
2,542 | - | 2,542 | |||||||||
Investment
securities
|
$ | 12,391 | $ | (4,647 | ) | $ | 7,744 | |||||
February
29, 2008
|
||||||||||||
Unrealized
|
Aggregate
|
|||||||||||
Holding
|
Fair
|
|||||||||||
Cost
|
Gain
|
Value
|
||||||||||
Long-term
Investment Securities*
|
$ | 4,550 | $ | - | $ | 4,550 | ||||||
CellStar
Common Stock*
|
1 | 110 | 111 | |||||||||
Bliss-tel
Stock and Warrants* (see Note 13)
|
3,825 | 1,141 | 4,966 | |||||||||
Other
Investment
|
1,000 | - | 1,000 | |||||||||
Deferred
Compensation Plan Assets - Trading Securities (see Note
10)
|
4,406 | - | 4,406 | |||||||||
Long-term
investments
|
$ | 13,782 | $ | 1,251 | $ | 15,033 |
·
|
Level
1 – Quoted prices in active markets that are unadjusted and accessible at
the measurement date for identical, unrestricted assets or
liabilities.
|
·
|
Level
2 – Quoted prices for identical assets and liabilities in markets that are
not active, quoted prices for similar assets and liabilities in active
markets or financial instruments for which significant inputs are
observable, either directly or
indirectly.
|
·
|
Level
3 – Prices or valuations that require inputs that are both significant to
the fair value measurement and
unobservable.
|
Fair
Value Measurements at Reporting Date Using
|
||||||||||||||||
Quoted
|
||||||||||||||||
Prices
in
|
||||||||||||||||
Active
|
||||||||||||||||
Markets
for
|
Significant
|
|||||||||||||||
Identical
|
Other
|
Significant
|
||||||||||||||
Assets
and
|
Observable
|
Unobservable
|
||||||||||||||
Liabilities
|
Inputs
|
Inputs
|
||||||||||||||
(Level
1)
|
(Level
2)
|
(Level
3)
|
||||||||||||||
Cash
and cash equivalents:
|
||||||||||||||||
Cash
and money market funds
|
$ | 69,504 | $ | 69,504 | $ | - | $ | - | ||||||||
Long-term
investment securities:
|
||||||||||||||||
Deferred compensation
assets and other
|
2,855 | 2,855 | - | - | ||||||||||||
Auction
rate security
|
3,415 | - | - | 3,415 | ||||||||||||
Other
long-term investments
|
1,474 | - | 1,474 | - | ||||||||||||
Total long-term
investment securities
|
7,744 | 2,855 | 1,474 | 3,415 | ||||||||||||
Total
assets measured at fair value
|
$ | 77,248 | $ | 72,359 | $ | 1,474 | $ | 3,415 |
Fair
Value Measurements Using Significant Unobservable Inputs
|
||||
(Level
3)
|
||||
Balance
at February 29, 2008
|
$ | - | ||
Auction
rate security transferred to Level 3
|
4,550 | |||
Total
unrealized loss included in accumulated other comprehensive
income
|
(1,135 | ) | ||
Balance
at February 28, 2009
|
$ | 3,415 |
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Trade
accounts receivable and other
|
$ | 112,456 | $ | 119,349 | ||||
Less:
|
||||||||
Allowance
for doubtful accounts
|
7,361 | 6,386 | ||||||
Allowance
for cash discounts
|
199 | 275 | ||||||
$ | 104,896 | $ | 112,688 |
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Land
|
$ | 338 | $ | 338 | ||||
Buildings
|
6,749 | 6,667 | ||||||
Property
under capital lease
|
6,981 | 6,981 | ||||||
Furniture,
fixtures and displays
|
3,496 | 3,049 | ||||||
Machinery
and equipment
|
6,791 | 6,515 | ||||||
Construction-in-progress
|
57 | 26 | ||||||
Computer
hardware and software
|
22,373 | 20,134 | ||||||
Automobiles
|
661 | 1,274 | ||||||
Leasehold
improvements
|
5,997 | 5,898 | ||||||
53,443 | 50,882 | |||||||
Less
accumulated depreciation and amortization
|
33,540 | 29,332 | ||||||
$ | 19,903 | $ | 21,550 |
Buildings
|
20-30
years
|
|
Furniture,
fixtures and displays
|
5-10
years
|
|
Machinery
and equipment
|
5-10
years
|
|
Computer
hardware and software
|
3-5
years
|
|
Automobiles
|
3
years
|
February
28,
|
||||
2009
|
||||
Net
beginning balance
|
$ | 23,427 | ||
Technuity
purchase price allocation (see Note 3)
|
5,411 | |||
Goodwill
impairment charge
|
(28,838 | ) | ||
Net
ending balance
|
$ | - |
February
28, 2009
|
||||||||||||||||||||
Gross
Carrying
|
Gross
|
Total
Net
|
||||||||||||||||||
Value
|
Carrying
|
Accumulated
|
Book
|
|||||||||||||||||
Pre-impairment
|
Impairment
|
Value
|
Amortization
|
Value
|
||||||||||||||||
Trademarks/Tradenames/Licenses
not subject to amortization
|
$ | 83,872 | $ | 9,957 | $ | 73,915 | $ | - | $ | 73,915 | ||||||||||
Customer
relationships subject to amortization (5-20 years)
|
13,079 | - | 13,079 | 1,357 | 11,722 | |||||||||||||||
Trademarks/Tradenames
subject to amortization (3-12 years)
|
1,180 | - | 1,180 | 269 | 911 | |||||||||||||||
Patents
subject to amortization (5-10 years)
|
1,345 | - | 1,345 | 562 | 783 | |||||||||||||||
License
subject to amortization (5 years)
|
1,400 | - | 1,400 | 373 | 1,027 | |||||||||||||||
Contract
subject to amortization (5 years)
|
1,104 | - | 1,104 | 938 | 166 | |||||||||||||||
Total
|
$ | 101,980 | $ | 9,957 | $ | 92,023 | $ | 3,499 | $ | 88,524 |
February
29, 2008
|
||||||||||||
Gross
|
Total
Net
|
|||||||||||
Carrying
|
Accumulated
|
Book
|
||||||||||
Value
|
Amortization
|
Value
|
||||||||||
Trademarks/Tradenames
not subject to amortization
|
$ | 86,368 | $ | - | $ | 86,368 | ||||||
Customer
relationships subject to amortization (5-15 years)
|
14,685 | 741 | 13,944 | |||||||||
Patents
subject to amortization (5-10 years)
|
695 | 385 | 310 | |||||||||
Contract
subject to amortization (5 years)
|
1,104 | 718 | 386 | |||||||||
Total
|
$ | 102,852 | $ | 1,844 | $ | 101,008 |
Fiscal
Year
|
Amount
|
|||
2010
|
$ | 1,727 | ||
2011
|
1,486 | |||
2012
|
1,408 | |||
2013
|
1,278 | |||
2014
|
1,065 | |||
$ | 6,964 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Opening
balance
|
$ | 10,768 | $ | 7,410 | $ | 8,512 | ||||||
Accruals
|
23,877 | 29,084 | 14,961 | |||||||||
Payments
|
(22,645 | ) | (21,618 | ) | (13,603 | ) | ||||||
Reversals
for unearned incentives
|
(1,664 | ) | (1,970 | ) | (1,148 | ) | ||||||
Reversals
for unclaimed incentives
|
(2,419 | ) | (2,138 | ) | (1,312 | ) | ||||||
Ending
balance
|
$ | 7,917 | $ | 10,768 | $ | 7,410 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Beginning
balance
|
$ | 17,319 | $ | 9,586 | $ | 9,947 | ||||||
Liabilities
acquired during acquisitions (see Note 3)
|
- | 12,848 | 1,705 | |||||||||
Liabilities
accrued for warranties issued
|
12,187 | 9,401 | 8,047 | |||||||||
Warranty
claims paid
|
(15,096 | ) | (14,516 | ) | (10,113 | ) | ||||||
Ending
balance
|
$ | 14,410 | $ | 17,319 | $ | 9,586 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Weighted-average
number of common shares outstanding (basic)
|
22,860,402 | 22,853,482 | 22,366,413 | |||||||||
Effect
of dilutive securities:
|
||||||||||||
Stock
options and stock warrants
|
- | 22,680 | 190,859 | |||||||||
Weighted-average
number of common and potential common shares outstanding
(diluted)
|
22,860,402 | 22,876,162 | 22,557,272 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Bliss-tel
(see Note 13)
|
$ | - | $ | 1,533 | $ | (178 | ) | |||||
Interest
Income
|
1,260 | 3,078 | 6,218 | |||||||||
Rental
income
|
538 | 552 | 552 | |||||||||
Other
|
(3,467 | ) | (454 | ) | (339 | ) | ||||||
Total
other, net
|
$ | (1,669 | ) | $ | 4,709 | $ | 6,253 |
Year
|
Year
|
|||||||
Ended
|
Ended
|
|||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Expected
dividend yield
|
0 | % | 0 | % | ||||
Expected
volatility
|
47.0 | % | 47.0 | % | ||||
Risk-free
interest rate
|
5.0 | % | 4.6 | % | ||||
Expected
life (years)
|
2.0 | 2.0 - 3.0 |
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Cost
of sales
|
$ | 7 | $ | 16 | $ | 21 | ||||||
Selling
expense
|
63 | 192 | 156 | |||||||||
General
and administrative expenses
|
234 | 662 | 245 | |||||||||
Engineering
and technical support
|
5 | 16 | 10 | |||||||||
Stock-based
compensation expense before income tax benefits
|
$ | 309 | $ | 886 | $ | 432 |
Weighted-
|
||||||||
Average
|
||||||||
Number
|
Exercise
|
|||||||
of
Shares
|
Price
|
|||||||
Outstanding at
February 28, 2006
|
$ | 2,197,152 | $ | 12.04 | ||||
Granted
|
105,000 | 13.42 | ||||||
Exercised
|
(485,000 | ) | 8.72 | |||||
Forfeited/expired
|
(32,500 | ) | 14.39 | |||||
Outstanding
and exercisable at February 28, 2007
|
1,784,652 | 12.97 | ||||||
Granted
|
275,000 | 10.90 | ||||||
Exercised
|
(408,866 | ) | 7.70 | |||||
Forfeited/expired
|
(83,750 | ) | 13.68 | |||||
Outstanding
and exercisable at February 29, 2008
|
1,567,036 | 13.96 | ||||||
Granted
|
214,750 | 4.83 | ||||||
Exercised
|
(10,000 | ) | 4.63 | |||||
Forfeited/expired
|
(314,952 | ) | 13.29 | |||||
Outstanding
and exercisable at February 28, 2009
|
$ | 1,456,834 | $ | 12.82 |
Outstanding
and Exercisable
|
||||||||||||||
Weighted-
|
Weighted-
|
|||||||||||||
Average
|
Average
|
|||||||||||||
Exercise
|
Exercise
|
Life
|
||||||||||||
Price
|
Number
|
Price
|
Remaining
|
|||||||||||
Range
|
of
Shares
|
of
Shares
|
in
Years
|
|||||||||||
$ | 4.63 - 8.00 | 214,750 | $ | 4.83 | 1.88 | |||||||||
$ | 8.01 - 13.01 | 242,084 | $ | 10.90 | 2.00 | |||||||||
$ | 13.01 - 15.00 | 1,000,000 | $ | 15.00 | 0.54 |
Assets
acquired:
|
||||
Inventory
|
$ | 31,664 | ||
Prepaid
expenses and other current assets
|
2,312 | |||
Tradename
|
51,099 | |||
Total
assets acquired
|
$ | 85,075 | ||
Liabilities
assumed:
|
||||
Accounts
payable
|
$ | 17,489 | ||
Accrued
expenses and other liabilities
|
2,870 | |||
Total
liabilities acquired
|
$ | 20,359 | ||
Cash
paid (includes cash paid plus estimated contingent fee)
|
$ | 64,716 |
Assets
acquired:
|
||||
Cash
|
$ | 200 | ||
Accounts
receivable, net
|
2,215 | |||
Inventory
|
1,939 | |||
Prepaid
expenses and other current assets
|
60 | |||
Property,
plant and equipment, net
|
327 | |||
Trademark
and other intangible assets
|
11,661 | |||
Total
assets acquired
|
$ | 16,402 | ||
Liabilities
assumed:
|
||||
Accounts
payable
|
$ | 601 | ||
Accrued
expenses and other liabilities
|
2,383 | |||
Income
taxes payable
|
891 | |||
Long-term
debt
|
807 | |||
Deferred
tax liability
|
3,586 | |||
Total
liabilities assumed
|
$ | 8,268 | ||
Total
purchase price (includes cash paid plus contingent
payment)
|
$ | 8,134 |
Assets
acquired:
|
||||
Trademark
and other intangible assets
|
$ | 801 | ||
Total
purchase price (includes cash paid plus estimated contingent
fees)
|
$ | 801 |
Purchase
Price (net of cash acquired)
|
$ | 20,373 | ||
Final
working capital credit
|
$ | (317 | ) | |
Acquisition
related costs
|
1,131 | |||
Total
Purchase Price
|
$ | 21,187 |
Assets
acquired:
|
||||
Accounts
receivable, net
|
$ | 3,920 | ||
Inventory
|
4,007 | |||
Property,
plant and equipment, net
|
103 | |||
Other
long-term assets
|
241 | |||
Trademarks
and other intangible assets
|
6,380 | |||
Goodwill
|
11,326 | |||
Total
assets acquired
|
$ | 25,977 | ||
Liabilities
assumed:
|
||||
Accounts
payable
|
$ | 3,689 | ||
Accrued
expenses and other liabilities
|
624 | |||
Deferred
tax liabilities
|
407 | |||
Other
liabilities
|
70 | |||
Total
liabilities assumed
|
$ | 4,790 | ||
Total
purchase price
|
$ | 21,187 |
Purchase
Price
|
$ | 18,953 | ||
Net
asset payment
|
10,079 | |||
Acquisition
related costs
|
926 | |||
29,958 | ||||
Less:
Multimedia license fee
|
(10,000 | ) | ||
Multimedia
inventory payment
|
(4,387 | ) | ||
Total
net purchase price
|
$ | 15,571 |
Assets
acquired:
|
||||
Inventory
|
$ | 14,383 | ||
Computers
|
49 | |||
Perpetual
license and other intangible assets (less multimedia license
fee)
|
19,887 | |||
Total
assets acquired
|
$ | 34,319 | ||
Liabilities
assumed:
|
||||
Warranty
accrual
|
$ | 12,848 | ||
Other
liabilities acquired
|
5,900 | |||
Total
liabilities assumed
|
$ | 18,748 | ||
Total
purchase price
|
$ | 15,571 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
(as
reported)
|
(unaudited)
|
|||||||||||
Net
Sales
|
$ | 603,099 | $ | 948,031 | $ | 1,156,582 | ||||||
Net
loss
|
(71,029 | ) | (1,972 | ) | (26,681 | ) | ||||||
Net
loss per share-diluted
|
$ | (3.11 | ) | $ | (0.09 | ) | $ | (1.18 | ) |
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Current
assets
|
$ | 25,268 | $ | 26,344 | ||||
Non-current
assets
|
4,745 | 4,710 | ||||||
Current
liabilities
|
3,778 | 4,611 | ||||||
Members'
equity
|
26,235 | 26,443 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
(unaudited)
|
||||||||||||
Net
sales
|
$ | 51,169 | $ | 71,726 | $ | 60,414 | ||||||
Gross
profit
|
12,691 | 20,869 | 17,764 | |||||||||
Operating
income
|
1,338 | 6,158 | 4,980 | |||||||||
Net
income
|
1,951 | 7,178 | 5,875 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
(unaudited)
|
||||||||||||
Net
Sales
|
$ | 1,026 | $ | 1,517 | $ | 742 | ||||||
Purchases
|
76 | 139 | 212 | |||||||||
Royalty
expense
|
500 | 899 | 656 |
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Accounts
Receivable
|
$ | 317 | $ | 310 |
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Commissions
|
$ | 571 | $ | 1,032 | ||||
Employee
compensation
|
2,788 | 4,697 | ||||||
Professional
fees and accrued settlements
|
3,187 | 1,888 | ||||||
Future
warranty
|
7,779 | 13,272 | ||||||
Freight
and duty
|
1,712 | 1,231 | ||||||
Royalties,
advertising and other
|
16,538 | 16,455 | ||||||
Total
accrued expenses and other current liabilities
|
$ | 32,575 | $ | 38,575 |
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Bank Obligations
|
||||||||
Domestic
bank obligations (a)
|
$ | - | $ | - | ||||
Venezuela
bank obligations (b)
|
- | - | ||||||
Euro
asset-based lending obligation (c)
|
1,467 | 3,070 | ||||||
Total
bank obligations
|
$ | 1,467 | $ | 3,070 | ||||
Debt
|
||||||||
Euro
term loan agreement (d)
|
$ | 5,735 | $ | - | ||||
Oehlbach
(e)
|
145 | 850 | ||||||
Other
(f)
|
1,280 | 853 | ||||||
Total
debt
|
$ | 7,160 | $ | 1,703 |
Total
|
||||||||||||||||||||||||
Amounts
|
||||||||||||||||||||||||
Committed
|
2010
|
2011
|
2012
|
2013
|
2014
|
|||||||||||||||||||
Bank
Obligations
|
$ | 1,467 | $ | 1,467 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Debt
|
7,160 | 1,264 | 2,640 | 1,359 | 948 | 948 | ||||||||||||||||||
Total
|
$ | 8,627 | $ | 2,731 | $ | 2,640 | $ | 1,359 | $ | 948 | $ | 948 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Domestic
Operations
|
$ | (56,786 | ) | $ | (1,262 | ) | $ | (1,140 | ) | |||
Foreign
Operations
|
832 | 11,856 | 3,298 | |||||||||
$ | (55,954 | ) | $ | 10,594 | $ | 2,158 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Current
provision (benefit)
|
||||||||||||
Federal
|
$ | 522 | $ | 314 | $ | (2,751 | ) | |||||
State
|
443 | 450 | 285 | |||||||||
Foreign
|
328 | 4,282 | 326 | |||||||||
Total
current provision (benefit)
|
$ | 1,293 | $ | 5,046 | $ | (2,140 | ) | |||||
Deferred (benefit)
provision
|
||||||||||||
Federal
|
$ | 12,446 | $ | (1,303 | ) | $ | 122 | |||||
State
|
1,617 | 121 | (63 | ) | ||||||||
Foreign
|
(281 | ) | (16 | ) | 547 | |||||||
Total
deferred (benefit) provision
|
$ | 13,782 | $ | (1,198 | ) | $ | 606 | |||||
Total
provision (benefit)
|
||||||||||||
Federal
|
$ | 12,968 | $ | (989 | ) | $ | (2,629 | ) | ||||
State
|
2,060 | 571 | 222 | |||||||||
Foreign
|
47 | 4,266 | 873 | |||||||||
Total
provision (benefit)
|
$ | 15,075 | $ | 3,848 | $ | (1,534 | ) |
Year
|
Year
|
Year
|
||||||||||||||||||||||
Ended
|
Ended
|
Ended
|
||||||||||||||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||||||||||||||
2009
|
2008
|
2007
|
||||||||||||||||||||||
Tax
provision at Federal statutory rates
|
$ | (19,584 | ) | 35.0 | % | $ | 3,708 | 35.0 | % | $ | 755 | 35.0 | % | |||||||||||
Tax
exempt interest
|
- | - | (999 | ) | (9.4 | ) | (2,146 | ) | (99.4 | ) | ||||||||||||||
State
income taxes, net of Federal benefit
|
(1,268 | ) | 2.3 | 17 | 0.2 | 23 | 1.1 | |||||||||||||||||
Impairment
of non-deductible goodwill
|
4,682 | (8.4 | ) | - | - | - | - | |||||||||||||||||
Increase
in valuation allowance
|
29,808 | (53.3 | ) | 95 | 0.9 | 6 | 0.3 | |||||||||||||||||
Change
in tax reserves
|
780 | (1.4 | ) | 369 | 3.5 | 61 | 2.8 | |||||||||||||||||
US
effects of foreign operations
|
541 | (1.0 | ) | 167 | 1.6 | - | - | |||||||||||||||||
Benefit
for prior year refunds
|
- | - | - | - | (378 | ) | (17.5 | ) | ||||||||||||||||
Permanent
differences and other
|
116 | (0.2 | ) | 491 | 4.5 | 145 | 6.7 | |||||||||||||||||
Effective
tax rate
|
$ | 15,075 | (27.0 | ) % | $ | 3,848 | 36.3 | % | $ | (1,534 | ) | (71.0 | )% |
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
Accounts
receivable
|
$ | 1,286 | $ | 282 | ||||
Inventory
|
1,581 | 1,664 | ||||||
Property,
plant and equipment
|
1,284 | 895 | ||||||
Intangible
assets
|
3,639 | - | ||||||
Accruals
and reserves
|
6,799 | 7,798 | ||||||
Unrealized
gains and losses
|
3,766 | - | ||||||
Net
operating losses
|
13,936 | 6,020 | ||||||
Tax
credits
|
3,313 | 3,307 | ||||||
Deferred
tax assets before valuation allowance
|
35,604 | 19,966 | ||||||
Less:
valuation allowance
|
(35,010 | ) | (2,684 | ) | ||||
Total
deferred tax assets
|
594 | 17,282 | ||||||
Deferred
tax liabilities:
|
||||||||
Intangible
assets
|
(4,723 | ) | (12,727 | ) | ||||
Prepaid
expenses
|
(1,411 | ) | (1,362 | ) | ||||
Unrealized
gain on investment securities
|
- | (2,115 | ) | |||||
Total
deferred tax liabilities
|
(6,134 | ) | (16,204 | ) | ||||
Net
deferred tax asset
|
$ | (5,540 | ) | $ | 1,078 |
Balance
at March 1, 2007
|
$ | 3,491 | ||
Additions
based on tax positions taken in the current and prior
years
|
507 | |||
Settlements
|
(108 | ) | ||
Lapse
in statute of limitations
|
(25 | ) | ||
Balance
at February 29, 2008
|
$ | 3,865 | ||
Additions
based on tax positions taken in the current and prior
years
|
2,014 | |||
Settlements
|
- | |||
Lapse
in statute of limitations
|
(125 | ) | ||
Balance
at February 28, 2009
|
$ | 5,754 |
Jurisdiction
|
Tax
Year
|
|
U.S.
|
2005
|
|
Germany
|
2006
|
|
Canada
|
2005
|
|
Indiana
|
2003
|
Shares
Authorized
|
Shares
Outstanding
|
Voting
|
|||||||||||||||||||||||
Par
|
February
28,
|
February
29,
|
February
28,
|
February
29,
|
Rights
per
|
Liquidation
|
|||||||||||||||||||
Security
|
Value
|
2009
|
2008
|
2009
|
2008
|
Share
|
Rights
|
||||||||||||||||||
Preferred
Stock
|
$ | 50.00 | 50,000 | 50,000 | - | - | - |
$50
per share
|
|||||||||||||||||
Series
Preferred Stock
|
$ | 0.01 | 1,500,000 | 1,500,000 | - | - | - | ||||||||||||||||||
Class
A Common Stock
|
$ | 0.01 | 60,000,000 | 60,000,000 | 20,604,460 | 20,593,660 |
One
|
Ratably
with Class B
|
|||||||||||||||||
Class
B Common Stock
|
$ | 0.01 | 10,000,000 | 10,000,000 | 2,260,954 | 2,260,954 |
Ten
|
Ratably
with Class A
|
Capital
|
Operating
|
|||||||
Lease
|
Leases
|
|||||||
2010
|
$ | 521 | $ | 4,757 | ||||
2011
|
521 | 3,649 | ||||||
2012
|
535 | 3,299 | ||||||
2013
|
574 | 2,609 | ||||||
2014
|
574 | 2,292 | ||||||
Thereafter
|
8,203 | 15,827 | ||||||
Total
minimum lease payments
|
10,928 | $ | 32,433 | |||||
Less: minimum
sublease income
|
368 | |||||||
Net
|
10,560 | |||||||
Less: amount
representing interest
|
4,953 | |||||||
Present
value of net minimum lease payments
|
5,607 | |||||||
Less:
current installments included in accrued expenses and other current
liabilities
|
76 | |||||||
Long-term
capital obligation
|
$ | 5,531 |
2010
|
$ | 693 | ||
2011
|
714 | |||
2012
|
735 | |||
2013
|
758 | |||
2014
|
781 | |||
Thereafter
|
4,110 | |||
Total
|
$ | 7,791 |
Net
Sales
|
||||||||||||
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
North
America
|
$ | 507,798 | $ | 501,952 | $ | 391,154 | ||||||
Latin
America
|
30,165 | 13,666 | 8,517 | |||||||||
Germany
|
52,252 | 61,746 | 46,291 | |||||||||
Other
foreign countries
|
12,884 | 13,991 | 10,728 | |||||||||
Total
net sales
|
$ | 603,099 | $ | 591,355 | $ | 456,690 |
Long-Lived
Assets
|
||||||||
As
of
|
As
of
|
|||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
North
America
|
$ | 116,219 | $ | 159,436 | ||||
Latin
America
|
1,417 | 496 | ||||||
Asia
|
417 | 414 | ||||||
Germany
|
13,019 | 14,640 | ||||||
Total
long-lived assets
|
$ | 131,072 | $ | 174,986 |
Year
|
Year
|
Year
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
February
28,
|
February
29,
|
February
28,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Electronics
|
$ | 449,433 | $ | 437,018 | $ | 432,943 | ||||||
Accessories
|
153,666 | 154,337 | 23,747 | |||||||||
Total
net sales
|
$ | 603,099 | $ | 591,355 | $ | 456,690 |
Quarters
Ended
|
||||||||||||||||
Feb.
28, 2009
|
Nov.
30, 2008
|
Aug.
31, 2008
|
May
31, 2008
|
|||||||||||||
2009
|
||||||||||||||||
Net
sales
|
$ | 115,666 | $ | 195,642 | $ | 147,208 | $ | 144,583 | ||||||||
Gross
profit
|
13,735 | 38,958 | 25,060 | 22,515 | ||||||||||||
Net
(loss) income from continuing operations
|
(70,021 | ) | 6,525 | (2,311 | ) | (5,223 | ) | |||||||||
Net
(loss) income per common share (basic)
|
$ | (3.06 | ) | $ | 0.29 | $ | (0.10 | ) | $ | (0.23 | ) | |||||
Net
(loss) income per common share (diluted)
|
$ | (3.06 | ) | $ | 0.29 | $ | (0.10 | ) | $ | (0.23 | ) | |||||
Quarters
Ended
|
||||||||||||||||
Feb.
29, 2008
|
Nov.
30, 2007
|
Aug.
31, 2007
|
May
31, 2007
|
|||||||||||||
2008
|
||||||||||||||||
Net
sales
|
$ | 131,269 | $ | 183,563 | $ | 148,269 | $ | 128,254 | ||||||||
Gross
profit
|
24,674 | 34,991 | 28,474 | 23,189 | ||||||||||||
Net
(loss) income from continuing operations
|
(1,785 | ) | 4,680 | 3,730 | 121 | |||||||||||
Net
(loss) income from discontinued operations
|
(392 | ) | - | - | 2,111 | |||||||||||
Net
(loss) income
|
$ | (2,177 | ) | $ | 4,680 | $ | 3,730 | $ | 2,232 | |||||||
Net
(loss) income per common share (basic):
|
||||||||||||||||
From
continuing operations
|
$ | (0.08 | ) | $ | 0.20 | $ | 0.16 | $ | 0.01 | |||||||
From
discontinued operations
|
(0.02 | ) | - | - | 0.09 | |||||||||||
Net
(loss) income per common share (basic)
|
$ | (0.10 | ) | $ | 0.20 | $ | 0.16 | $ | 0.10 | |||||||
Net
(loss) income per common share (diluted):
|
||||||||||||||||
From
continuing operations
|
$ | (0.08 | ) | $ | 0.20 | $ | 0.16 | $ | 0.01 | |||||||
From
discontinued operations
|
(0.02 | ) | - | - | 0.09 | |||||||||||
Net
(loss) income per common share (diluted)
|
$ | (0.10 | ) | $ | 0.20 | $ | 0.16 | $ | 0.10 |
Column
A
|
Column
B
|
Column
C
|
Column
D
|
Column
E
|
||||||||||||||||
Gross
|
||||||||||||||||||||
Amount
|
Reversals
of
|
|||||||||||||||||||
Balance
at
|
Charged
to
|
Previously
|
Balance
|
|||||||||||||||||
Beginning
|
Costs
and
|
Established
|
at
End
|
|||||||||||||||||
Description
|
of
Year
|
Expenses
|
Accruals
|
Deductions
(a)
|
of
Year
|
|||||||||||||||
Year
ended February 28, 2007
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 6,136 | $ | (23 | ) | $ | - | $ | 1,051 | $ | 5,062 | |||||||||
Cash
discount allowances
|
325 | 1,483 | - | 1,543 | 265 | |||||||||||||||
Accrued
sales incentives
|
8,512 | 14,961 | (2,460 | ) | 13,603 | 7,410 | ||||||||||||||
Reserve
for warranties and product repair costs (b)
|
9,947 | 9,752 | - | 10,113 | 9,586 | |||||||||||||||
$ | 24,920 | $ | 26,173 | $ | (2,460 | ) | $ | 26,310 | $ | 22,323 | ||||||||||
Year
ended February 29, 2008
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 5,062 | $ | (297 | ) | $ | - | $ | (1,621 | ) | $ | 6,386 | ||||||||
Cash
discount allowances
|
265 | 3,377 | - | 3,367 | 275 | |||||||||||||||
Accrued
sales incentives
|
7,410 | 29,084 | (4,108 | ) | 21,618 | 10,768 | ||||||||||||||
Reserve
for warranties and product repair costs (b)
|
9,586 | 22,249 | - | 14,516 | 17,319 | |||||||||||||||
$ | 22,323 | $ | 54,413 | $ | (4,108 | ) | $ | 37,880 | $ | 34,748 | ||||||||||
Year
ended February 28, 2009
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 6,386 | $ | (1,905 | ) | $ | - | $ | (2,880 | ) | $ | 7,361 | ||||||||
Cash
discount allowances
|
275 | 3,649 | - | 3,725 | 199 | |||||||||||||||
Accrued
sales incentives
|
10,768 | 23,877 | (4,083 | ) | 22,645 | 7,917 | ||||||||||||||
Reserve
for warranties and product repair costs (b)
|
17,319 | 12,187 | - | 15,096 | 14,410 | |||||||||||||||
$ | 34,748 | $ | 37,808 | $ | (4,083 | ) | $ | 38,586 | $ | 29,887 |
Exhibit
|
||
Number
|
Description
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of the Company as filed with the
Delaware Secretary of State on April 17, 2000 (incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended November
30, 2000).
|
|
3.2
|
By-laws
of the Company (incorporated by reference to the Company's Registration
Statement on Form S-1; No. 33-10726, filed May 4,
1987).
|
|
3.2a
|
Amendment
to the Bylaws of the Company (incorporated by reference to the Company's
Form 8-K filed via EDGAR on July 3, 2007).
|
|
10.1
|
Purchase
Agreement made and entered into as of December 20, 2006 by and between
Thomson and Audiovox Corporation (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended February 28,
2007).
|
|
10.2
|
Audiovox
Corporation 2006 Stock Compensation Plan (incorporated by reference to the
Company's Form S-8 filed via EDGAR on October 13, 2006)
|
|
10.3
|
Employment
Agreement made effective as of the 1st day of March, 2007 by and between
the Company and Patrick M. Lavelle (incorporated by reference to the
Company's Form 8-K filed via EDGAR on June 15, 2007)
|
|
10.4
|
Form
of Transition Services Agreement (incorporated by reference to the
Company's Form 8-K filed via EDGAR August 10, 2004).
|
|
10.5
|
Form
of Trademark License Agreement (incorporated by reference to the Company's
Form 8-K filed via EDGAR August 10, 2004).
|
|
10.6
|
Distribution
Agreement between Audiovox Electronics Corporation and Sirius XM Radio
Inc. dated as of January 8, 2009 (incorporated by reference to the
Company’s Form 8-K filed via EDGAR on January 15,
2009).
|
|
21
|
Subsidiaries
of the Registrant (filed herewith).
|
|
23
|
Consent
of Grant Thornton LLP (filed herewith).
|
|
31.1
|
Certification
of Principal Executive Officer Pursuant to Rule 13a-14(a) and rule
15d-14(a) of the Securities Exchange Act of 1934 (filed
herewith).
|
|
31.2
|
Certification
of Principal Financial Officer Pursuant to Rule 13a-14(a) and rule
15d-14(a) of the Securities Exchange Act of 1934 (filed
herewith).
|
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished
herewith).
|
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (furnished herewith).
|
|
99.1
|
Consolidated
Financial Report of Audiovox Specialized Applications LLC (ASA) as of
November 30, 2008 and 2007 and for the Years Ended November 30, 2008, 2007
and 2006 (filed herewith).
|
|
99.2
|
Consent
of McGladrey & Pullen, LLP (filed
herewith).
|
Signature
|
Title
|
Date
|
/s/ Patrick
M. Lavelle
Patrick
M. Lavelle
|
President;
Chief Executive Officer
(Principal
Executive Officer) and Director
|
May
14, 2009
|
/s/ Charles
M. Stoehr
Charles
M. Stoehr
|
Senior
Vice President,
Chief
Financial Officer (Principal
Financial
and Accounting Officer) and Director
|
May
14, 2009
|
/s/ John J. Shalam
John
J. Shalam
|
Chairman
of the Board of Directors
|
May
14, 2009
|
/s/ Philip Christopher
Philip
Christopher
|
Director
|
May
14, 2009
|
/s/ Paul C. Kreuch,
Jr.
Paul
C. Kreuch, Jr.
|
Director
|
May
14, 2009
|
/s/ Dennis McManus
Dennis
McManus
|
Director
|
May
14, 2009
|
/s/ Peter A. Lesser
Peter
A. Lesser
|
Director
|
May
14, 2009
|
Subsidiaries
|
Jurisdiction
of Incorporation
|
Audiovox
Accessories Corp.
|
Delaware
|
Audiovox
Consumer Electronics, Inc.
|
Delaware
|
Audiovox
Electronics Corporation
|
Delaware
|
American
Radio Corp.
|
Georgia
|
Audiovox
Venezuela C.A.
|
Venezuela
|
Audiovox
German Holdings GmbH
|
Germany
|
Code
Systems, Inc.
|
Delaware
|
1.
|
I
have reviewed this annual report on Form 10-K of Audiovox Corporation (the
“Company”);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b)
|
Designed
such internal controls over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materiality affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
1.
|
I
have reviewed this annual report on Form 10-K of Audiovox Corporation (the
“Company”);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b)
|
Designed
such internal controls over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual
report)
that has materiality affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
(1)
|
The
Report fully complies with Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
(1)
|
The
Report fully complies with Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Report
of Independent Registered Public Accounting Firm
|
1
|
Consolidated
Financial Statements
|
|
Consolidated
balance sheets
|
2
|
Consolidated
statements of income
|
3
|
Consolidated
statements of members' equity
|
4
|
Consolidated
statements of cash flows
|
5
|
Notes
to financial statements
|
6-14
|
Audiovox
Specialized Applications, LLC and Subsidiary
|
||||||||
(A
Limited Liability Company)
|
||||||||
Consolidated
Balance Sheets
|
||||||||
November
30, 2008 and 2007
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 5,012,292 | $ | 1,267,393 | ||||
Available-for-sale
securities
|
3,995,000 | 4,900,000 | ||||||
Trade
receivables
|
2,956,954 | 5,411,975 | ||||||
Inventories
|
14,376,282 | 15,181,445 | ||||||
Prepaid
expenses
|
176,928 | 135,982 | ||||||
Total
current assets
|
26,517,456 | 26,896,795 | ||||||
Leashold
Improvements and Equipment at depreciated cost
|
1,999,681 | 2,122,580 | ||||||
Intangible
Assets, trademark rights
|
2,647,623 | 2,647,623 | ||||||
$ | 31,164,760 | $ | 31,666,998 | |||||
LIABILITIES
AND MEMBERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$ | 1,368,205 | $ | 1,541,118 | ||||
Accrued
expenses:
|
||||||||
Payroll
and related taxes
|
770,296 | 1,457,057 | ||||||
Warranty
|
2,647,000 | 2,457,000 | ||||||
Other
|
243,673 | 83,165 | ||||||
Total
current liabilities
|
5,029,174 | 5,538,340 | ||||||
Commitments
and Contingencies
|
||||||||
Members'
Equity
|
26,135,586 | 26,128,658 | ||||||
$ | 31,164,760 | $ | 31,666,998 | |||||
See
Notes to Financial Statements
|
Audiovox
Specialized Applications, LLC and Subsidiary
|
||||||||||||
(A
Limited Liability Company)
|
||||||||||||
Consolidated
Statements of Income
|
||||||||||||
November
30, 2008, 2007 and 2006
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
sales
|
$ | 60,421,895 | $ | 71,368,141 | $ | 57,142,023 | ||||||
Cost
of goods sold
|
49,920,774 | 56,006,751 | 43,814,678 | |||||||||
Gross
profit
|
10,501,121 | 15,361,390 | 13,327,345 | |||||||||
Selling,
general and administrative expenses
|
7,417,272 | 8,583,032 | 7,824,861 | |||||||||
Operating
income
|
3,083,849 | 6,778,358 | 5,502,484 | |||||||||
Nonoperating
income (expense):
|
||||||||||||
Investment
income
|
92,544 | 103,449 | 292,623 | |||||||||
Interest
expense
|
- | (574 | ) | - | ||||||||
92,544 | 102,875 | 292,623 | ||||||||||
Net
income
|
$ | 3,176,393 | $ | 6,881,233 | $ | 5,795,107 | ||||||
See
Notes to Financial Statements
|
Audiovox
Specialized Applications, LLC and Subsidiary
|
||||||||||||
(A
Limited Liability Company)
|
||||||||||||
Consolidated
Statements of Members' Equity
|
||||||||||||
November
30, 2008, 2007 and 2006
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Balance,
beginning
|
$ | 26,128,658 | $ | 23,336,848 | $ | 24,145,549 | ||||||
Net
income
|
3,176,393 | 6,881,233 | 5,795,107 | |||||||||
Member
distributions
|
(3,169,465 | ) | (4,089,423 | ) | (6,603,808 | ) | ||||||
Balance,
ending
|
$ | 26,135,586 | $ | 26,128,658 | $ | 23,336,848 | ||||||
See
Notes to Financial Statements
|
Audiovox
Specialized Applications, LLC and Subsidiary
|
||||||||||||
(A
Limited Liability Company)
|
||||||||||||
Consolidated
Statements of Cash Flows
|
||||||||||||
November
30, 2008, 2007 and 2006
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
Flows From Operating Activities
|
||||||||||||
Net
income
|
$ | 3,176,393 | $ | 6,881,233 | $ | 5,795,107 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
|
770,546 | 813,970 | 669,795 | |||||||||
Inventory
writedowns and reserves
|
2,018,565 | 89,784 | 80,899 | |||||||||
Loss
on sale of equipment
|
18,996 | 234,282 | 25,203 | |||||||||
Change
in assets and liabilities:
|
||||||||||||
Decrease
(increase) in:
|
||||||||||||
Trade
receivables
|
2,455,021 | (562,504 | ) | (914,946 | ) | |||||||
Inventories
|
(1,037,503 | ) | (253,014 | ) | (5,986,868 | ) | ||||||
Prepaid
expenses
|
(40,946 | ) | (20,452 | ) | (5,415 | ) | ||||||
Increase
(decrease) in:
|
||||||||||||
Accounts
payable
|
(172,913 | ) | (537,780 | ) | 556,328 | |||||||
Accrued
expenses
|
(512,152 | ) | 344,501 | 436,482 | ||||||||
Net
cash provided by operating activities
|
6,676,007 | 6,990,020 | 656,585 | |||||||||
Cash
Flows From Investing Activities
|
||||||||||||
Proceeds
on sale of equipment
|
17,520 | 6,660 | 3,813 | |||||||||
Purchase
of leasehold improvements and equipment
|
(684,163 | ) | (1,327,404 | ) | (838,513 | ) | ||||||
Proceeds
from sale of available-for-sale securities
|
10,910,225 | 10,870,000 | 19,529,850 | |||||||||
Purchase
of available-for-sale securities
|
(10,005,225 | ) | (12,200,000 | ) | (12,849,850 | ) | ||||||
Net
cash provided by (used in) investing activities
|
238,357 | (2,650,744 | ) | 5,845,300 | ||||||||
Cash
Flows From Financing Activities
|
||||||||||||
Member
distributions
|
(3,169,465 | ) | (4,089,423 | ) | (6,603,808 | ) | ||||||
Increase
(decrease) in cash and cash equivalents
|
3,744,899 | 249,853 | (101,923 | ) | ||||||||
Cash
and cash equivalents, beginning
|
1,267,393 | 1,017,540 | 1,119,463 | |||||||||
Cash
and cash equivalents, ending
|
$ | 5,012,292 | $ | 1,267,393 | $ | 1,017,540 | ||||||
See
Notes to Financial Statements
|
Note
1.
|
Nature
of Business and Significant Accounting
Policies
|
Years
|
||||
Leasehold
improvements
|
5-9 | |||
Machinery
and equipment
|
5-10 | |||
Tooling
and molding
|
3 | |||
Transportation
equipment
|
5 | |||
Office
furniture and fixtures
|
10 | |||
Computer
equipment
|
3-5 | |||
Booth
displays
|
7 |
2008
|
2007
|
2006
|
||||||||||
Balance,
beginning
|
$ | 2,457,000 | $ | 2,307,000 | $ | 2,390,000 | ||||||
Accruals
for products sold
|
2,032,340 | 2,497,155 | 1,671,385 | |||||||||
Payments
made
|
(1,842,340 | ) | (2,347,155 | ) | (1,754,385 | ) | ||||||
Balance,
ending
|
$ | 2,647,000 | $ | 2,457,000 | $ | 2,307,000 |
Note
2.
|
Available-For-Sale
Securities
|
2008
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Unrealized
|
Unrealized
|
Fair
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
Government
bonds
|
$ | 3,995,000 | $ | - | $ | - | $ | 3,995,000 | ||||||||
2007
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Unrealized
|
Unrealized
|
Fair
|
||||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
|||||||||||||
Government
bonds
|
$ | 4,900,000 | $ | - | $ | - | $ | 4,900,000 |
Fair
|
||||||||
Cost
|
Value
|
|||||||
Due
after three years
|
$ | 3,995,000 | $ | 3,995,000 |
2008
|
2007
|
2006
|
||||||||||
Balance,
beginning
|
$ | 2,457,000 | $ | 2,307,000 | $ | 2,390,000 | ||||||
Accruals
for products sold
|
2,032,340 | 2,647,155 | 1,671,385 | |||||||||
Payments
made
|
(1,842,340 | ) | (2,497,155 | ) | (1,754,385 | ) | ||||||
Balance,
ending
|
$ | 2,647,000 | $ | 2,457,000 | $ | 2,307,000 | ||||||
Proceeds
from the sale of available-for-sale securities
|
$ | 10,910,225 | $ | 10,870,000 | $ | 19,529,850 | ||||||
Interest
earned
|
$ | 92,544 | $ | 103,449 | $ | 292,623 |
Note
3.
|
Leasehold
Improvements and Equipment
|
2008
|
2007
|
|||||||
Leasehold
improvements
|
$ | 1,018,958 | $ | 1,012,313 | ||||
Machinery
and equipment
|
1,203,214 | 1,219,853 | ||||||
Tooling
and molding
|
1,090,036 | 847,807 | ||||||
Transportation
equipment
|
474,447 | 402,707 | ||||||
Office
furniture and fixtures
|
374,778 | 374,282 | ||||||
Computer
equipment
|
1,053,533 | 871,681 | ||||||
Booth
displays
|
202,220 | 215,965 | ||||||
Construction
in progress
|
56,769 | 154,309 | ||||||
5,473,955 | 5,098,917 | |||||||
Less
accumulated depreciation
|
3,474,275 | 2,976,337 | ||||||
$ | 1,999,681 | $ | 2,122,580 |
Note
4.
|
Pledged
Assets and Notes Payable
|
Note
5.
|
Major
Vendors
|
Note
6.
|
Transactions
with Related Parties and Lease
Commitments
|
2008
|
2007
|
2006
|
||||||||||
Net
product sales
|
$ | 84,000 | $ | 144,000 | $ | 210,000 | ||||||
Royalty
revenue
|
629,000 | 831,000 | 649,000 | |||||||||
Purchases
|
481,000 | 879,000 | 1,248,000 |
2008
|
2007
|
|||||||
Trade
receivables
|
$ | 70,000 | $ | 143,490 | ||||
Accounts
payable
|
166,000 | 359,376 |
Related
Party
|
Other
|
Total
|
||||||||||
During
the year ending November 30,
|
||||||||||||
2009
|
$ | 508,000 | $ | 19,000 | $ | 527,000 | ||||||
2010
|
508,000 | 8,000 | 516,000 | |||||||||
2011
|
508,000 | - | 508,000 | |||||||||
2012
|
508,000 | - | 508,000 | |||||||||
Thereafter
|
1,398,000 | - | 1,398,000 | |||||||||
$ | 3,430,000 | $ | 27,000 | $ | 3,457,000 |
Note
7.
|
Employee
Benefit Plans
|
Note
8.
|
Litigation
|
Note
9.
|
Major
Customer
|
Note
10.
|
Disclosures
About Fair Value of Financial
Instruments
|